“So far, smartwatches are only offering minor benefits,” said Canalys analyst Daniel Matte. At this point, smartwatches – Samsung’s Galaxy Gear as well as similar offerings from Sony Corp. and others – work mainly as accessories that work in tandem with smartphones. The Galaxy Gear is slated to go on sale Sept. 25 for $299.

Despite the hype, smartwatches still lack compelling usage, and it’s unclear how many people will pay a few hundred dollars when there are few things that the devices offer that smartphones don’t, Mr. Matte said.

One way to address that problem is to have a clear focus, such as health and fitness, to take advantage of the fact that the device is always on the user’s body.

In terms of hardware, battery life is a major challenge. Companies need to come up with more power-efficient chips or other ways to make the battery last at least for a few days, Mr. Matte said.

On the software front, smartwatches need more apps that not only work well with smartphones, but also apps that can help make smartwatches themselves more attractive as standalone devices. This week, Line, a popular smartphone messaging app with 230 million users around the world, said it has developed a Galaxy Gear version of the app. Line Corp., the Tokyo-based developer of the app, said Line will come preinstalled in the Galaxy Gear from October.

Back in July, Canalys forecast that smartwatch shipments world-wide would top 5 million units next year, up tenfold from just 500,000 units expected this year. Last year, about 330,000 smart watches were shipped. The Canalys forecast is based on the assumption that by the end of 2014, Samsung, Apple Inc., Google Inc. and Microsoft Corp. will all have launched smartwatches.

That’s a tiny market compared to smartphones. Worldwide smartphone shipments are expected to top 1 billion units this year, up 40% from last year, according to research firm IDC.

The smartwatch shipments forecast is a fairly realistic number, Mr. Matte says, as Canalys expects that smartwatches will initially only appeal to a limited audience and won’t be a mainstream product.